Consequences on short-selling following UK FSA’s final rules in FINMAR book – Kinetic Partners

Opalesque Industry Update - Further to the FSA’s recent Handbook Release 104, the FSA has published the final rules into the Financial Stability and Market Confidence Sourcebook (FINMAR). These provisions relate to financial stability, market confidence and short selling.

We remind firms that as a consequence of the establishment of FINMAR, the short selling provisions, previously in Market Conduct (MAR) 1.9.2A to 1.9.2D, have been moved to FINMAR 2. No further changes were made to the short selling provisions. Firms should update their compliance manuals to ensure the references to MAR 1.9.2A to 1.9.3 are replaced with their FINMAR equivalent. The relevant section in the Kinetic Partners’ template manual, can be found under the heading ‘Financial Crime’.

Set out below is the revised wording that should replace the existing section. Please copy the text below and paste it to replace your current wording.

‘Disclosure of Significant Short Positions

During Rights Issues

FINMAR 2.2.1 requires Firms to disclose a Disclosable Short Position the Firm holds in shares during the period of a Rights Issue.

A Disclosable Short Position is defined as being a short position, which at midnight first represents an economic interest of one quarter of one percent (0,25%) of the issued capital of that Issuer within a Rights Issue Period.

A Rights Issue Period is defined as the period that commences on the date an Issuer announces a Rights Issue and which ends on the date the Shares issued under the Rights Issue are admitted to trading on a Prescribed Market.

UK Financial Sector Companies

FINMAR 2.2.3 requires Firms to disclose a Disclosable Short Position the Firm holds in shares in a UK Financial Sector Company.

A Disclosable Short Position is defined as being a short position which reaches, exceeds or falls below a disclosable short position of 0.25%, 0.35%, 0.45% and 0.55% of the issued share capital of the company and each 0.1% threshold thereafter.